Whiteshield at Davos: The Global Labour Resilience Index 2024: A call for climate-friendly labour markets

Amidst the challenges of global warming, the 2024 Global Labour Resilience Index (GLRI) emphasizes the profound impact on labour markets. It delves into the direct consequences of climate change, such as displacement, migration, and fluctuations in both physical and mental well-being and highlights the imperative shift toward green sustainability in legislative and policy frameworks. The report provides insights for strengthening labour markets to withstand climate challenges, urging policymakers to adopt a holistic strategy that integrates climate and labour policies.

Europe leads the way in labour market resilience

In the 2024 GLRI rankings, the top ten continue to be dominated by European countries, except Singapore, which occupies 4th place. Switzerland has the most resilient labour market globally and is followed closely by Denmark and the Netherlands. The top-ranked countries are characterised by stable macroeconomic environments, strong educational systems, inclusive labour markets, and high innovation levels. They are open and technologically advanced economies that are deeply integrated into global value chains and marked by diverse trading partners. Their institutional capabilities have proven crucial in navigating challenges like the COVID-19 pandemic and in addressing long-term structural changes, including digital and green transformations. However, not all European countries rank in the top ten, highlighting a regional disparity in labour resilience, particularly in Eastern and Southern Europe. As Europe aims to be the first climate-neutral bloc by 2050 through the European Green Deal, levelling up skills, and social protection become essential to capitalise on the emerging green economy. Furthermore, addressing the challenges of an ageing population remains crucial.

Middle East

Meanwhile, in the Middle East, a green transition is vital to diversify economies beyond oil and gas, fostering innovation, and expanding trade. The preparedness of labour markets for the green transition can really make a significant difference in its development prospects and stand in the GLRI ranking. However, while some countries, like the UAE, have established favourable business conditions, constrained innovation, and the scarce utilisation of high-skilled labour are hampering the labour market performance. Since high-skilled roles often entail creative processes, policymaking should continue to steer the region towards a knowledge economy, where such occupations can thrive. It is paramount to enhance higher education and research, while also attracting and incentivising firms that employ skilled workers. For Saudi Arabia, investing in education, particularly among the youth, is imperative to upgrade workforce skills. It also needs to continue allocating resources towards a policy framework that supports its green transition, ensuring sustainable development and an equitable transition.

Switzerland

Switzerland leads this year’s GLRI, rising from the 2nd to the 1st place. This leap is following an improvement in its economic diversity, namely an increase in the variety of goods the economy can produce, likely tied to its expanding green economy. Switzerland’s success can be credited to its skilled workforce and outstanding innovation. The labour market is supported by sound economic fundamentals, quality institutions, investment in R&D, dynamic entrepreneurship, and an effective financial system. Like other advanced countries, Switzerland faces an ageing population, potentially shrinking the workforce, and placing the burden on the healthcare and social systems. Policy should respond by targeting the participation rate of older workers and women, as well as facilitating skilled immigration. A related challenge for Switzerland is ensuring an adequate number of workers with the requisite skills, mainly technical and STEM, during all stages of the green transition. While the Swiss skilled workforce currently meets the demand for green jobs, a shortage may lead some industries to relocate their production to other countries.

China and India

China, ranked 36th, can redefine its economy through the green transition, as underpinned by innovation, domestic consumption, and market orientation. It has the potential to become a leader in low-carbon technology and green finance, bringing benefits like increased green sector productivity, high-skilled job creation, better employment quality, and reduced labour market disparities.  A key challenge for China is to ensure a sufficient supply of green skills to meet the demand for green jobs, while also protecting workers during this transition.

For India (61st), the green transition is a golden chance to modernise, elevate living standards, and boost productivity. It can create millions of new green jobs in the energy sector and foster technological innovation. Transitioning to a green economy is also expected to cut pollution, thereby decreasing the mortality rate, and enhancing worker health. However, there’s a big task ahead for India in creating policies and laws to better define green jobs and ensure a just transition. This entails setting the legislative framework to create quality green jobs, protecting vulnerable workers, enhancing working standards, and promoting gender equality.

Identifying the Challenges for Global Labour Markets

By comprehensively ranking 136 economies, the GLRI 2024 showcases some key insights into the strengths and weaknesses of the global labour market. The report recognises that jobs are exposed not only to the direct impact of global warming but also the consequences of climate policies that have been introduced to tackle it. While absorbing and adapting to climate shocks will lead to robust labour markets and effective policies, countries need to prioritise empowering their citizens through education to enable the green transition. Labour-resilient, high-income countries with quality institutions are better equipped to move forward on the green transition. However, in stark contrast, the report identifies that labour markets in 59 out of 136 countries are ill-prepared for the changes induced by climate policies.

Moving forward

The evolution towards sustainability necessitates structural changes in the economy, with effective policies and institutions serving as catalysts for “greening” the labour market. Policies should aim to curb the widening of inequalities during the green transition and mitigate potential risks associated with it. Furthermore, policymakers should prioritise strengthening economic fundamentals to enable labour markets to seize emerging green opportunities. Macroeconomic stability, trade resilience, and robust governance structures protect workers and firms from shocks and foster their adaptability in response to the changes brought about by the greening of the economy.

The conceptual framework of GLRI 2024 is designed to measure the ability of labour markets to face and recover from disruptions, and to adjust to ongoing megatrends. To be resilient, labour markets also need to be inclusive and sustainable. Labour resilience rests on two components: the Structural Pillar, encompassing long-term factors like demographics and economic stability, and the Cyclical Pillar, representing areas influenced by short-term policies. The Cyclical Pillar further explores absorption, adaptive, transformative, and institutional capabilities, illustrating a country’s ability to manage shocks, recover quickly, align with future trends, and foster resilience across all crisis phases and disruption types.